Entrepreneurs longing current crowd the legal structure of their occupation identical before they kick-off analogous pet project, if unrivaled to dash off factual that they at once the risks and the advantages involved sway underivative that softhearted of field. Occupation owners can choose to put up a sole or single proprietorship, enter into a partnership or form a corporation.
Each of the three legal structures has its own advantages and disadvantages. A sole proprietorship is the easiest type of business to put up and operate because only one person is responsible for decision making and for running the business. However, being alone in business means you are solely responsible for whatever happens to you business and you only have to rely on your own capital and resources.
A partnership is better considering that two or more heads are always better than one. A partnership offers more possibility in terms of capital base and of brain power. However, partnerships do not always work due to conflicting business decisions.
The next if not the best option is to form a corporation which would be composed of incorporators who will put up the seed capital for the business. A corporation can provide more sources of funds and the owners are only liable to as much as the money they have invested in the business. Provided of course that the corporation does not indulge in illegalities or does things in bad faith. Doing so would necessitate the application of the principle of piercing the veil of corporate fiction. This means that the owners can be made accountable even beyond the amount of their investments if they are found to be in bad faith in certain transactions.
While the corporation has proven to be the best option for business owner, there is apparently another option called the Limited Liability Company which offers the characteristics of both partnership and corporation. Members of a Limited Liability Company can enjoy the limited liability enjoyed by corporations unless a personal guarantee has been signed. This legal structure also offers tax benefits much like the benefits available to corporations.
A Limited Liability Company does not however require the bureaucracy of a corporation in terms of the taking of minutes. And unlike in a partnership where the partners can only participate in decision - making depending on their partnership status, members of a Limited liability Company can take part in decision making without losing their limited liability protection.
However, while a corporation can last for 50 years renewable for another period, a Limited Liability Company can be easily disbanded particularly when a member dies or becomes bankrupt. It is also more feasible to form a corporation if there are plans to do a public offering.
Despite the disadvantages of forming a Limited Liability Company, it is still the best choice for business start ups that are still testing the waters but already want to give their business a legal structure.
Showing posts with label Finance. Show all posts
Showing posts with label Finance. Show all posts
Thursday, July 30, 2009
Why Is Factoring Critical Prestige Employment?
A business plunge restraint acquaintance cash shortage or difficulty prerogative being liquor like if it has receivables and steady assets that are more than its payables and other liabilities.
There are easy solutions to cash shortage just so a business enterprise can meet its short term obligations like payroll. Among these solutions include loans or short - term borrowing and factoring accounts. Factoring accounts can be done for accounts that are expected to be received by a company during a certain period.
A person who wants to avail of credit through the factoring of his accounts receivable must submit an application form which will then be reviewed by the agency concerned. Once approved, the applicant should consider the terms of the loan proposal and wait for a maximum of seven days within which the agency will con duct a credit investigation. The investigation will cover the applicant’s credit status, tax payments and liens as well as any pending criminal case.
After which, the applicant must submit the original invoices of services rendered or good s delivered. Once the invoices are verified, a fund amounting to about eight percent of the total invoice will be approved and advanced to the applicant. The balance will be held until the invoices are fully paid.
Payments for services rendered and goods delivered will be sent directly to the credit agency which will in turn release the balance of the total invoice less the appropriate payments for their services.
Getting short term financing through factoring of the accounts receivable of a business enterprise can be easily availed of even through the internet. There are credit agencies that have made the process easier by making forms available online. By filling up the form online the applicant can have his accounts receivable assessed before he speaks to a credit representative.
Companies selling services ad well as distributors selling products are eligible for the factoring of their accounts receivable provided the services have already been rendered and the goods already delivered.
This method of accessing easy funding is commonly used by trucking companies who have thousands of accounts receivables in the form of freight bills. However, these companies have to pay their truckers as well as pay business overheads so they cannot wait for a month or more for these bills to be liquidated.
Factoring is an easier way to get additional funding for business compared to the traditional financing methods which require lots of paperwork and long waiting periods. With a meager amount deducted by credit agencies from the invoices, usually one to six percent, small business can already add to their cash flow and can run their businesses efficiently.
There are easy solutions to cash shortage just so a business enterprise can meet its short term obligations like payroll. Among these solutions include loans or short - term borrowing and factoring accounts. Factoring accounts can be done for accounts that are expected to be received by a company during a certain period.
A person who wants to avail of credit through the factoring of his accounts receivable must submit an application form which will then be reviewed by the agency concerned. Once approved, the applicant should consider the terms of the loan proposal and wait for a maximum of seven days within which the agency will con duct a credit investigation. The investigation will cover the applicant’s credit status, tax payments and liens as well as any pending criminal case.
After which, the applicant must submit the original invoices of services rendered or good s delivered. Once the invoices are verified, a fund amounting to about eight percent of the total invoice will be approved and advanced to the applicant. The balance will be held until the invoices are fully paid.
Payments for services rendered and goods delivered will be sent directly to the credit agency which will in turn release the balance of the total invoice less the appropriate payments for their services.
Getting short term financing through factoring of the accounts receivable of a business enterprise can be easily availed of even through the internet. There are credit agencies that have made the process easier by making forms available online. By filling up the form online the applicant can have his accounts receivable assessed before he speaks to a credit representative.
Companies selling services ad well as distributors selling products are eligible for the factoring of their accounts receivable provided the services have already been rendered and the goods already delivered.
This method of accessing easy funding is commonly used by trucking companies who have thousands of accounts receivables in the form of freight bills. However, these companies have to pay their truckers as well as pay business overheads so they cannot wait for a month or more for these bills to be liquidated.
Factoring is an easier way to get additional funding for business compared to the traditional financing methods which require lots of paperwork and long waiting periods. With a meager amount deducted by credit agencies from the invoices, usually one to six percent, small business can already add to their cash flow and can run their businesses efficiently.
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